The following is a guest post from Kevin at Graduating from Debt. If you would like to submit a guest post, please contact me.
Money is a huge aspect in almost everyone’s life. Without it we could not eat, sleep, or just live. Below is a list of 12 facts about money everyone thinks are true and the truth behind them. In this article you will learn a bit about financial decisions people make and what they think they know about money as well as what is true and what you can do today to increase your happiness and gain more financial freedom.
12 facts About Money Everyone Thinks Are True
1. Students Graduate school with too many student loans – Although most students do leave school with a lot of student loans, did you know there are ways to pay them down quicker? Just giving up your daily Starbucks run and working while in college can save you lots of money.
2. Owning a house is better than renting – Owning a house costs money. You must pay for everything when something goes wrong. Some people even say the opposite and that renting is the better way to go. Experts like Suze Orman agree. Like Ramit Sethi says, you should look at owning a house as a purchase not as a investment. I agree with this view.
3. You Will Never be Able to Retire– Did you know that if you saved $300 a month from the time you were 26 until you were 46 and invested the earning until you were 65, you could be a millionaire when you retire? Hear me out first. If you saved that amount and gain 10% interest every year from the time you were 26 until you retired at 65, you will be a millionaire when you retire. It’s true. Do the math.
4. Buying a new car is cheaper than buying a used car in the long run – Conventional wisdom says that everyone should buy a new car because of the warranty. However, if you do the math, buying a used car is a lot less expensive than buying a new car. Once you purchase a new car and drive off the lot, it can lose up to 9% of it’s True Market Value.
5. Cash advances are the only option when you need money – You are better off charging purchases on your credit card than getting hit with a 21% interest rate on your cash advances.
6. Bankruptcy is my only option for all my credit card debt – You owe it to yourself to fix the problem and not escape into bankruptcy. Contacting the National Foundation For Credit Counseling (1-800-388-2227) and speaking with a debt counselor they recommend is a better option.
7. If I can not pay my student loans, I will just file bankruptcy – Students loans stick with you forever and will not go away with a bankruptcy claim. You must figure out a way to pay those loans off.
8. You are unemployed and can’t pay your student loans, now what? – Contact your lender immediately and see if you qualify for a deferment. You will still gain interest but will not have to pay on them now.
9. I should start saving, even if I have credit card debit – No you should not. The interest gained on your saving account is lower than your credit card interest, so it is best to get that debt paid off first before you go ahead and start saving.
10. 401k’s are unstable, and I could lose all my money if my company fails – Relax. All that money is yours. The only money you could potentially lose is any money invested in the company itself. So spread your 401k account into different investments.
11. Once I invest the maximum into my Roth IRA, I have no where else to go with my money – Roth IRA’s are good because they give you a tax break. Once you max that out there are plenty of other options. You just will not get that great of a tax break like you do with a Roth IRA. Always keep saving whatever you can though.
12. I can only get a 10% or higher interest rate on my car loan because my FICO score is so low – The solution here is simple. Increase your FICO score and refinance your car loan. This will get you a better rate and give you some self accomplishment as well.
These are the 12 facts about money everyone thinks are true and the truth behind those facts. A lot of people just do not know what can be done with their money and get stuck. Contacting a financial advisor would be a great step in the right direction. Just knowing these 12 facts will really help you in becoming more financially free.
My name is Kevin Watts and I am the creator of www.graduatingfromdebt.com. I was like millions of recent college graduates in heavy debt with very little hope. With the right attitude and discipline I took control of my financial picture, and now I can say proudly that I am debt free.
Kim’s Comments: I think it’s easy to get caught up in what we’ve heard or been taught and not do our own research on what is best financially. I’ve certainly been guilty of believing a few of those “facts” myself.